SANTA CRUZ - While the former Santa Cruz Redevelopment Agency was a critical link in building the new Monterey Bay National Marine Sanctuary Exploration Center, it is itself unraveling in an opaque process designed by the state.

Prompted by Gov. Jerry Brown, the Legislature has ordered the elimination of more than 400 such agencies statewide as a way to redirect more property taxes back to schools and municipal governments.

Although it once appeared agencies would be able to buy their way out of closing, California's highest court ruled late last year the state could indeed shutter them, take their property tax increment and leave the future of their assets in the hands of an oversight board, with final decisions made by the state.

Sorting out which assets the city of Santa Cruz, which will act as the successor to the former agency, can hang on to or liquidate will take a while. Former agency staff hope an oversight board made up of local officials, as well as final decision makers in Sacramento, will leave the properties in the city's possession.

They include the 1936 Del Mar Theatre, a Soquel Avenue lot used for free public parking, a trolley transporting visitors from the beach to downtown, two affordable housing complexes and the Tannery Arts Center, which provides live-work lofts for low-income artists. Those assets are all under some form of contract, a status which could provide some protection under the law.

"We think all that is safe," said Bonnie Lipscomb, the city's economic development director who, until recently, also held the title of redevelopment director.

The agency, which has managed the National Marine Sanctuary project, spent about $750,000 on related infrastructure and public art. The center was already under construction when the governor proposed ending redevelopment in January 2011, and the property, valued at $2 million, was donated by the city, not the agency.

While twin laws governing the dissolution of redevelopment agencies beg a lot of questions - even among state officials charged with executing them - there is agreement that former redevelopment properties used for the public good might be safe from the chopping block.

"If the oversight board determined something should not be disposed of for those reasons and the state Department of Finance would take a look at that and agree, that could be one outcome," said H.D. Palmer, deputy director of the state finance division.

There is no "hard-and-fast deadline," Palmer said, as to when the fate of assets must be determined.

"It is in the interest of the state that assets be disposed of in a timely matter, but we're not seeking a fire sale," he said.

While the city's Gault Street and Nueva Vista affordable housing projects are seen as providing clear public benefits, Lipscomb met with officials in Sacramento recently to seek clarity on whether the theater, parking lot and trolley could also be kept. Definitive answers were elusive.

The theater, under a management contract with the Nickelodeon Theatre, is used for film festivals and other public uses. The parking lot is free to the public in a high-traffic area, and the trolley, which costs a quarter per ride, hauled 22,000 people in its inaugural season last year.

"There's an obvious benefit to the city not to have people sitting in their vehicles between downtown and the beach," Lipscomb said.

As for the Tannery Arts Center, the city has three leases with Artspace to manage the affordable housing and other aspects of the River Street campus. Federal stimulus grants used to build the project also require public ownership.

State finance officials say $33 million in bonds issued by the city last year to cover projects on the Redevelopment Agency's list of five-year goals might be OK to tap for ongoing, contracted projects. Although cities are advised against signing new contracts, finance officials said how bonds are structured and what the contracts cover could make them permissible by the state.

"When you have more than 400 former redevelopment agencies, each with its own circumstances, it's difficult to construct a one-size-fits-all rule," Palmer said.

As the city prepares a list of its redevelopment assets and financial obligations to report to Sacramento, Mayor Don Lane is expected during a Feb. 28 meeting of the City Council to make two appointments to the oversight board - likely a former redevelopment staff member and a city council member, Lipscomb said. The council will appoint a third member, likely a downtown property owner.

The other four members will be appointed by the county Board of Supervisors, Cabrillo College and county Office of Education.

Lipscomb is hopeful to save the former redevelopment staff, who also work for the city's economic development division managing the Municipal Wharf, downtown kiosks, affordable housing and city arts program. She said she will argue during upcoming city budget planning that the staff is still needed.

The former Redevelopment Agency, created to oversee downtown and Eastside revitalization, received $13 million in annual tax revenue, nearly half of which was already passed on to schools and other entities. The agency budgeted $1.2 million annually for operations.

As a result of ending redevelopment, an estimated $1.7 billion in tax funding statewide will be redistributed into pots for schools, cities, counties and special districts, Palmer said. That total doesn't include estimated revenue from asset sales.

Below are assets belonging to the former Santa Cruz Redevelopment Agency, which was officially dissolved Feb. 1 and the city of Santa Cruz named as the successor and owner of its property. An oversight board will determine whether to dispose of the properties, with a final decision in the state's hands.